Flowers Foods has reported another challenging quarter for volumes as the US bakery group downgraded forecasts for sales and profits.
New York-listed Flowers Foods’ shares dropped yesterday (12 November), extending the year’s slide to 44%, as it posted a 63.6% decrease in third-quarter net income to $14.4m, along with a drop in sales and adjusted EBITDA.
Diluted EPS more than halved in the three months to 10 October, coming in at $0.07 versus $0.19 a year earlier.
Marking another sequential decline, volumes were down 7% as sales of bread loaves failed to recover as anticipated.
The Canyon Bakehouse and Dave's Killer Bread brand owner's volumes had fallen 5.8% in the second quarter, more than the 3.3% decrease in the opening three months, and the 2.2% drop in the final quarter of the previous year.
“Our third-quarter results reflect a continued challenging operating environment, driven by pressure on household budgets, evolving consumer behaviour and heightened promotional activity, as well as areas where we need to move faster with focused execution," Ryals McMullian, its chairman and CEO, said in the results statement.
Annual guidance for 2026 sales was cut yesterday for the second time this fiscal year as they fell 4.7% in the third quarter to $1.169bn.
Management expects a print of around $5.016bn to $5.063bn, which would represent a 4.6% to 3.7% decline on the previous 12 months, when they increased 3% to $5.256bn.
The sales forecast had also been lowered at the second-quarter results stage in August, to a range of $5.070bn to $5.142bn, from $5.163bn to $5.267bn. That estimate would have corresponded to a 3.5% to 2.2% decrease on the previous year.
McMullian added: “Following the second quarter, we expected our earlier pricing actions and the relaunch of Nature's Own with fewer, simpler ingredients to help stabilise performance as we worked to introduce new innovation to market.
“We are seeing encouraging signs for Nature's Own, including improving sequential trends and growing awareness of the relaunch, although the pace of improvement has been slower than anticipated, primarily in loaf, where category trends remain challenging.”
However, the CEO said he expects “the environment to remain challenging in the near term but we remain confident in the long-term potential of the business”.
The adjusted EBITDA outlook was also lowered. That metric fell 33.2% in the third quarter to $78.9m.
It is projected at around $415-$430m for the full year, compared to the August guidance of $453-$481m. That same month, Flowers Foods also cut the estimate from $465-$495m.
In 2025, adjusted EBITDA had dropped 0.6% to $535.2m.
A similar story is playing out for adjusted diluted EPS after the third-quarter slide. A range of $0.63 to $0.68 is forecast from the August guidance of $0.75 to $0.85.
The estimate was cut that month from $0.80 to $0.90. Last year, $0.19 was shaved off EPS to $1.09.
"Our strategic focus remains centered on strengthening our leading brands and accelerating innovation to better align our portfolio with where consumer demand is moving," McMullian said.
"As we look ahead, we are putting our brands, network, and capabilities to work to improve performance and support long-term earnings growth."
